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RENEWABLE ENERGY RESOURCES LEGAL FRAMEWORK Argentina – Canada – France

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									RENEWABLE ENERGY RESOURCES

LEGAL FRAMEWORK

Argentina – Canada – France
Energy Days 2007
October 19th, 2007

Alejandro G. Gorbato

GROSSO & GORBATO Lawyers
Buenos Aires - Argentina

aggorbato@grossogorbato.com.ar
www.grossogorbato.com.ar

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

ARGENTINA : General Regulations of Electrical Energy

• Law N° 24.065, 1992: defines the REGULATORY FRAME WORK of
the Argentine Electrical Market.

Vertical Disintegration of the Electrical Sector:
Thermal: free compet, no Gov auth

 Generation Gral. Interest activities
 Transportation Public Service  Distribution Public Service  Large Consumers

Hydroelectric: subject to exploitation
concessions.

SECTION 2 -The generation of wind and solar electrical energy can be produced by individualsl or enterprises with an address in the country and regulated by the present legislation.

Law 25.019 – Wind & Solar energy (Do not requier state authorization)

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Reasons for the increase interest in Renewable Energies

- Global Warming - Environmental Polution - Risk of extinction of fosil fuels
Measures to promote Renewable Energies

- Carbon Credits (Kyoto Protocol) - Fiscal incentives for the development of renewable energies - Tax on fuels that contaminate or higher Specific taxes on polluted fuels or

-

higher rates Subsidies and financing of the development of ecological equipment for the production of energy Obligations of the purchase of renewable energy at a sustainable price Tax credits for investments in generation of renewable energy Environmental requirements and urban planning

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

KEY FACTORS FOR THE DEVELOPMENT OF RENEWABLE ENERGY
– Availability of renewable resources (wind, sun, cereal, etc). – Manufacturing, set-up and assembly of factories. – Adaptable electric transmission infrastructure. – Capacity to support the extra costs of renewable energy. - Incentives: fiscal, subsidies, etc. – Temporary stability guaranteed in order to amortize investments.

• Resources:

• Technological Efficiency:

• Economic and social context:
• Legal framework:

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Argentina: Renewable Energy- Legal Framework

National Wind and Solar Energy Program: Act 25.019

National Promotion Regime to Encourage Electric Energy from Renewable Sources: Act 26.190

Regulation and Promotion Program for the Production and Sustanaible Use of Biofuels: Act 26.093

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Argentina: Wind and Solar Energy Act 25.019 and Decree 1597/99

• Declared Public Interest • Promotion of its use
• Promotion for Research

GENERA CION P OR TIP O DE CENTRA L 2006 (1 03.764 GWh)

T. Vapor 14,50% T. Gas 6,23%

Nuclear 7,41%

C.C. 34,91%

• Freedom to generate

Eólica 0,17% Gran Reno vables 36,71% Hidráulica 95,5% Pequeña Hidraúlica 4,33%

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Argentina: Wind and Solar Energy Act 25.019 y Decree 1597/99
Economic Incentives Fiduciary Reward Funds System for Renewable Energy:
wind power solar photovoltaic geothermal energy waves biomass dump gases purification plant gases biogas up to 30 MW hydroelectric power

That supply wholesale markets and / or give public services

Duration: 15 years from the application date (for new equipments to be installed) or since they were installed (for the already installed ones)

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Argentina: Wind and Solar Energy Act 25.019 and Decree 1597/99
Fiscal Benefits

• The payment of the VAT is deferred for 15 years

from the promulgation of this Act: payable in 15 annuities from the last deferred monthly payment

• Fiscal stability for 15 years
Except VAT and Contributions of Social Security.
Fiscal Stability: inability to affect the project with a total tax burden higher than the existing one at October 19, 1998, as a consequence of increases in tax contributions and/or rates, whatsoever, or the creation of new ones.

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Argentina: Wind and Solar Energy Act 25.019 and Decree 1597/99

Obligations of the Promoted Companies
a) To fulfill the Project: chronogram of Investments and other legal obligations of the program. b) Accounting separated from the Project, as a unit of independent business. c) Request the certification of the starting date and the definitive starting date within 30 days of the request.

Energy Days Calabria 2007

GROSSO & GORBATO – Abogados (Argentina)

United States – Wind Energy

• Production Tax Credit Extension: income tax credit of 2 cents/kilowatt-hour
allowed for the production of electricity from wind energy facilities and other sources of renewable energy.
Energy Policy Act of 1992 applies to electricity produced by a qualified wind facility placed in service after December 31, 1992, and before January 1, 2009. It covers only large utility-scale wind projects, not individuals who want to install their own wind power systems for on-site power.

• Renewable Portfolio Standard: uses market mechanisms to ensure that a growing percentage of electricity is produced from renewable sources, like wind power. Provides a predictable, competitive market, within which renewable generators will compete with each other to lower prices.
Bill H.R. 969 would create a national RPS, requiring utilities to generate or buy 20 percent clean, renewable energy by 2020.

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

United States – Solar Energy

• Million Solar Roofs Initiative: A national initiative administered by

the U.S. Energy Department. Promotes a goal of installing one million new solar installations across the country, through its states and local partnerships. make solar energy cost-competitive with conventional forms of electricity by 2015. Promotes activities in research and development (R&D) and in market transformation. The goals are to reduce costs through R&D and to eliminate market barriers through deployment.

• The Solar America Initiative: is a U.S. Energy Department effort to

• H.R. 2776 (Renewable Energy and Energy Conservation Tax

Act of 2007) & H.R. 3221 (New Direction for Energy Independence, National Security, and Consumer Protection Act): both were voted in August 2007. Extends the 30 percent solar energy investment tax credit for businesses through 2016 and improve on the tax credits for homeowners as well. Provides funds to support the research, development, and commercial application of solar energy technologies.

Energy Days Calabria 2007

GROSSO & GORBATO – lawyers (Argentina)

France – Renewable Energy Agency
ADEME

(Agence de l'environnement et de la maitrise de l'énergie)

- French State Agency for Environment and Energy Conservation -

Action plans for States/Regions:

Regional Air Quality Plans, Urban Mobility Plans, Regional Plans for the Disposal of Industrial Waste, Collective Energy and Transport Schemes, District Waste Disposal Plans, etc.
Modes of intervention:

Research activities, Subsidies, Financing of investments, Promote Collective Heat Networks (wood energy solutions), Wind Energy program for private companies (Eole 2005, 250-500 MW), Fiscal benefits to seduce investors to develop Renewable Energy Resources (domestic solar water heating, wind electricity generation, electricity generation from biomass).

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

FRANCE –Renewable Energy Resource Policies: “Wind Energy”
Installed Wind Power: 1,500 MW at the end of 2006-France is pursuing the development of this sector.

Circular on September 10 and October 13, 2003: Promotion for the implantation of wind turbines on land and the public domain at sea: • Widen the generating capacity of wind power generation between 2000 and 6000

FRENCH LAW nº 2003-660 of 21 July 2003 “Law Program for Overseas”. • Long term goals (15 years) •Promote sustainable economic development . • Development of the activity and responsibility (no handouts). Regions: Guadeloupe, Guyana, Martinique, Reunion and St. Pierre and Miquelon.
Economic Sectors: Hospitality Industry , Renewable Energy Resources, Enterprise Financing for SMORGs.

MW. •Promoting concessions of public domain at
sea. • The implantation of offshore wind farms

outside the administrative boundaries of the
ports and anchored to the bottom of the sea. • The goods are not removed from the public

Objectives: 1-Encourage job creation; 2-Encourage private investment through tax exemptions; 3-Strengthening the territorial continuity between communities overseas and the mainland.

domain. • Concessions for a term not exceeding 30

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

CANADA
Natural Resources Canada (www.nrcan.gc.ca)

($1.48 billion to increase Canada's supply of clean electricity from renewable sources.)

“ecoENERGY Program for Renewable Power”

Renewable sources: wind, solar, biomass, low-impact hydro, geothermal, and ocean energy. Encourages the production of 14.3 tetra watt hours of new electricity from renewable energy sources (enough to power about 1,000,000 homes.)
Businesses, municipalities, institutions and organizations are eligible.

Financial Incentives: $CAN 0.01 per kilowatt-hour for up to 10 years to eligible low-impact, renewable electricity projects constructed over the next four years (April 1, 2007 to March 31, 2011.)

Energy Days Calabria 2007

GROSSO & GORBATO – Abogados (Argentina)

CANADA
Natural Resources Canada (www.nrcan.gc.ca)

ecoENERGY for Renewable Heat: four-year, $36 million investment
(runs from April 1, 2007 to March 31, 2011)

“Using the power of the sun to heat buildings and water not only helps businesses lower costs, but it reduces the amount of harmful emissions produced.”

• Increase the use of renewable thermal energy by industry, commercial

businesses and institutions. • Boost the amount of renewable thermal energy created for these sectors. • Contribute to cleaner air by limiting the use of fossil fuel-based energy for space and water heating in buildings. • ecoENERGY for Renewable Heat will offer an incentive to industrial, commercial and institutional purchasers of solar heating systems. The incentive will rebate 25 percent of the purchase, installation and certain other costs of qualifying systems.
Preliminary estimates suggest that, by 2011, the program will have supported installations in about 700 buildings: Businesses, industries and public institutions

Incentives are offered to the industrial/commercial/institutional sector to install active energy-efficient solar air and/or water heating systems.

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Québec Energetic Strategy
Act No. 134 amending various laws of the municipal area (December 16, 2005)


CANADA

Allows the involvement of municipalities for wind energy production.

"Any municipality now has the powers to establish, with a private sector firm, a joint company to generate electricity using wind energy. Municipalities will be able to enjoy the benefits of the exploitation of this resource. "


Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Argentina: National Promotion Plan to Encourage Electrical Energy from Renewable Sources: Act 26.190
Wind, solar, geothermal, hydro up to 30 MW, landfill gas, sewage treatment plant and biogas, except biofuels

• Reduction In the use of fossil fuels • • National interest in this generation

• Diversification of the energy sources
• Objective for 2017: contribution to 8%

GENERA CION P OR TIP O DE CENTRA L 2006 (1 03.764 GWh)

T. Vapor 14,50% T. Gas 6,23%

Nuclear 7,41%

• Promotion of the investment
• Creation of employments

C.C. 34,91%

Eólica 0,17% Gran Reno vables 36,71% Hidráulica 95,5% Pequeña Hidraúlica 4,33%

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Argentina: Electrical energy from Alternative Sources Act 26.190
It increases the charges destined for contributions to the Fiduciary Fund of Renewable Energies (created by Act 25.019)

Establish incentives for wind generators and photovoltaic solar generators during a period of 15 years from the date of installation. ( Section 14, in the same sense as Act 25.019)

The National Ministry of Energy will increase the charge up to 0,3 $/MWh, to fund the FIDUCIARY FUND OF RENEWABLE ENERGIES, administered and assigned by the Federal Council of the Electric power. (Art. 14, which modifies the 5 º of the Law 25.019)

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Argentina: Electric Energy from Alternative Sources – Act 26.190 Incentives
MODALITY: it is possible to defer the VAT that should be paid on the capital of the investments for 15 years. The deferred amounts shall be paid in 15 annuities from the year after service begins or six years from the time the project was approved, which ever one comes first.

Value-added tax (VAT)

EFFECT: Financial Benefit.

Financial Tax

MODALITY: To practice intensive amortizations of assets.

EFFECT: Financial impact according to the fiscal year in 2 points of the TIR.

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Examples of Provincial Promotion Program

Argentina – Wind and Solar Energy

Act 4.389 – Province of Chubut
(July 30, 1998)

Act 12.603 – Province of Buenos Aires
(June 3, 1999)

Benefits for the manufacturing of wind power generation equipment. •Provincial tax exemption for 10 years. •Fiscal stability for 10 years from when the Law is passed.

Fiscal benefits: Provincial tax exemption for 15 years to real estate destined for the installation of wind generators. Funding: special loans from the Provincial Bank.

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Argentina - Biofuels Promotion Program: Act 26.093

• Beneficiaries: local companies with specific corporate purpose
• Capital stock: majority from the Argentine State or agricultural
producers

• Control: quality, safety and environment • Term: 15 years • Incentives: subsidy possibilities • Fiscal quota: fixed annually granting priority to small and medium
companies, agricultural manufacturers and regional economies.

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Argentina- Biofuels Promotion Program: Act 26.093
• Exemption to specific taxes applicable to fossil fuels

• Early return of VAT or accelerated depreciation of assets • Tax Exemption for the Minimum Presumed Income (up to and
including the third year since the launch)
on fossil fuel taxes.

• Plants qualified for producers' self-consumption: exempt from payment • Fiscal promotion does not reach the sale of pure Biofuels or having
blends of less than 5 %, unless authorized

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Argentina - Biofuels Promotion Program: Act 26.093

It is highly probable that the difference in price between biofuels and fossil fuels in Argentina will continue to be significant. Consequently, the dynamic of the internal market demand of biofuel will depend on the effectiveness of the new legislation and the control procedures. In order to promote major investments, there should be considered the possibility of granting legal and fiscal stability during a reasonable and limited period of time

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Canada – Biofuels

Federal Government
• Current Federal incentives: excise tax exemptions ($0.10 per litre for ethanol and $0.04 for biodiesel) •No tariff on renewable fuels imported from the US •Tariff on ethanol imported from Brazil: $0.05 per litre
• Planned to require Renewable Fuel content in:

- Gasoline: 5% commencing in 2010 - Diesel and Heating Oil: 2% starting in 2012
• A draft would be proposed by fall 2008

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

Canada – Biofuels

Provincial Incentives
• British Columbia: road tax exemptions for ethanol and

biodiesel of $0.145 and $0.150 per litre respectively.

• Alberta: $209 million over four years and $30 million for commercialization support
• Quebec: income tax credit for ethanol manufacturers that produce and sell in Quebec. Quebec also offers reimbursement of fuel taxes paid on the purchase of biodiesel.

• Ontario: Ethanol Growth Fund intended to provide ethanol production incentives of $520 million over 12 years

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

United States – Biofuels

Federal Government
• 2005 Energy Policy Act requires Renewable Fuels as a percentage of gasoline that a company produces or imports at levels estimated to start at 3,7% in 2007, and increase to 4,9% in 2012 • In September 2006, the U.S. Environment Protection Agency (EPA) published a notice of proposed rulemaking to implement the renewable fuels requirements
• As required by the Energy Policy Act, the proposal includes a credit and trading program that recognizes a broad suite of Renewable Fuels used for transportation

Energy Days Calabria 2007

GROSSO & GORBATO – Lawyers (Argentina)

France – Biofuels
Directive 2003/30/CE: renewable fuels level of 2% in 2005 and 5,75% in 2010
Directive 2003/96/CE: allows to grant partial or complete tax exemptions on renewable fuels

Act 2006-11 (5/1/2006) called “agricultural orientation” requires higher targets than the EU ones:

2008: at least 5,75% of biofuel in fuel used in transportation 2010: at least 7,5% of biofuel in fuel used in transportation 2015: at least 10% of biofuel in fuel used in transportation
«Taxe intérieure de consommation»: reduced rates applies
“General Tax on Pollution activities”: calculated over the sales of fuels at a progressive annual rate (1,20% in 2005 up to 7% in 2010) but allowing reductions proportional to level of effective integration of renewable fuels

Thank you for Listening!
Alejandro G. Gorbato
Partner

GROSSO & GORBATO

Lawyers

BUENOS AIRES - ARGENTINA
aggorbato@grossogorbato.com.ar www.grossogorbato.com.ar


								
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